Chong Hing Bank Ltd. (1111), Hong Kong’s smallest family-run lender, jumped to the highest level since its stock market debut 19 years ago after a media report that there may be a new bid for a stake in the lender.
The potential buyer may offer HK$40 a share, or about 2.3 times book value, for the stake held by the Liu family, Oriental Daily News reported today, citing market speculation. Shares of the bank, in which the family controls about 60 percent, jumped 7 percent to HK$28.45, the highest since July 12, 1994, at 1:37 p.m., data compiled by Bloomberg show.
Independent third parties have approached the controlling shareholder of Liu Chong Hing Investment (194) Ltd., the parent company, about a possible purchase of interests in Chong Hing Bank, the companies said in a joint statement Aug. 7. Takeover speculation has mounted since November, when Lau Wai-man became the first chief executive officer from outside the Liu family.
“A bid of 2.3 times P/B is an attractive one given that the financial market right now is still not yet back to the heyday of 2007,” Ronald Wan, a committee member at the Hong Kong Securities & Investment Institute, said by phone. “If I were the bidder, I would pay two times P/B at the most, as Chong Hing Bank isn’t the best choice among the family banks in Hong Kong in terms of its clientele and branch network.”
Shares of Chong Hing Bank have doubled since Nov. 28, when it announced Lau would replace Liu Lit-chi, a member of the founding family who spent more than 50 years at the bank. The lender is trading at about 1.6 times book value, data compiled by Bloomberg show.
Miranda Tse, a spokeswoman at Chong Hing Bank, declined to comment on today’s report. CEO Lau said in March that the lender was open to proposals from prospective buyers for all or part of the bank.
Yue Xiu Group, a trading arm of China’s Guangzhou city government, is considering a bid for Chong Hing Bank, a person familiar with the matter said this month.
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